I have seen some pretty remarkable offers on this site. Unbelievable offers! People offering things like a kicking PIII and 400 + GB of transfer for $99/mth!!! Makes me wonder:

1. Where the heck are you people getting bandwidth (You must own your own infrastructure or something 'cause I just can't seem to find bandwidth at under 0.25/GB, which is what you’re saying it costs you?!!

2. Where are they getting equipment?? Those servers sound great and at those prices you must have got 'em for free! I want to get me come 'o that!

3. You must be running a not for profit joint right? You got money to burn right? Or are you just trying to kill the industry?

Speak up y'all! Let me in on the secret.

RACKSHACK

Well they are probally use coagent.They sell 100mb connection roughly $1000 a month which alot cheaper than any other competors.They only ploblem because there price is so low alot of people are signing up and sometimes the service is not as good as some other companies.The only suggest if you getting a webshost using coagent you may you want if they have any other bandwidth providers in addition to them.You can search the messageboard for coagent. Well on hardware note computers are not that expensive right now.There is ussually a setup fee which helps pay for system.

There's plenty of ways to make money with those prices:

Buy bulk. Ever wonder why your mother bought 50 kilos of mayonnaise? Here's your answer.

Play the numbers game. Myself and coworkers have run many well-known and popular sites in the past. Even when providing large downloads we still maxed around 60-70gb per week, considerably less than 400gb/mo.

Setup fees. $99/mo + $399 setup fee. Assuming the average user sticks around for 8 months the company ends up averaging ~$150/mo.

Streamline EVERYTHING. For all we know Headsurfer and customer service staff run the company out of his mom's basement to save money.

It's doable but extremely risky. If you're unlucky with your users and everyone uses their allotted bandwidth right from the get-go you're screwed. That's one of the reasons companies like RackShack enjoy minimal competition, they got in at the right time and picked up enough low-profile clients to balance off the high-rollers.

Sincerely,

-Matt

Originally posted by RackNine
There's plenty of ways to make money with those prices:

Buy bulk. Ever wonder why your mother bought 50 kilos of mayonnaise? Here's your answer.

Play the numbers game. Myself and coworkers have run many well-known and popular sites in the past. Even when providing large downloads we still maxed around 60-70gb per week, considerably less than 400gb/mo.

Setup fees. $99/mo + $399 setup fee. Assuming the average user sticks around for 8 months the company ends up averaging ~$150/mo.

Streamline EVERYTHING. For all we know Headsurfer and customer service staff run the company out of his mom's basement to save money.

It's doable but extremely risky. If you're unlucky with your users and everyone uses their allotted bandwidth right from the get-go you're screwed. That's one of the reasons companies like RackShack enjoy minimal competition, they got in at the right time and picked up enough low-profile clients to balance off the high-rollers.

Sincerely,

-Matt Very well put!

Thank you :D

On the same note I'm very much interested in RackShack and headsurfer Robert Marsh guiding of this ship. Sailing the rapids as a shortcut to a long, slow, winding river takes some serious balls with very little room for error.

Learning from and understanding how to use and build on the same foundations as RackShack - given the proper environment - will help grow businesses exponentially in size through controlled chaos. What you do once you've reached critical mass remains to be seen!

Sincerely,

-Matt

Oh come on Matt et al!

I was not specifically referring to Rackshack but let's just say that I am anyway. I fail to see what is admirable in the Rackshack strategy.

Let's say that your customer stays around for 12 months (Your calculations depend on someone leaving after 8 months! Is that what they are counting on?)

99*12=1188
+350=1538


Let's say that the machines that they use cost them $20
per month or 240 in total

1538-240=1298

Let's say that the customer uses 1/8 of the bandwidth that they pay for:

400 GBpm/8= 50GBpm = ~ 0.16Mbps
Let's say that bandwidth costs you $1/GBpm that's 25/mth or 600/year

1298-600= 698

Lets say that all other operational expenses for that customer (advertising in Wired, staff, rent, the head surfers haircuts, etc) costs you a mere 40/mth

698-480= 218

=18.16/mth...

hmmmmm well actually that wouldn't be so bad.... That set-up fee goes a long way in year 1.

forget it :D

Originally posted by Spock69
Well they are probally use coagent.They sell 100mb connection roughly $1000 a month which alot cheaper than any other competors.They only ploblem because there price is so low alot of people are signing up and sometimes the service is not as good as some other companies.

Just so you know, cogent for web operation is 3000 per month.

there offer for 1000 is for business use only ( non- web related firms )

mike

And last I checked there is a minimum requirement of 1000mbps to run Cogent to any facility that doesn't yet have it. That Gig line cost $30k per month, still a great price for that amount of bandwidth.

I think the hosting industry is pretty flooded these days with lower and lower prices and eventually things are going to fall out. People/companies get investing of sorts and they burn through it eventually so basically those companies that have things finely tuned and keep costs way down are going to survive until an equilibrium can be met...

What makes it worse are the companies providing the equipment and the servers, once they begin to fall then the hosting companies surviving off of their low costs will go down too.

I don't think Wal-mart (Rackshack) is going to fall so easily.

Originally posted by Jag
And last I checked there is a minimum requirement of 1000mbps to run Cogent to any facility that doesn't yet have it. That Gig line cost $30k per month, still a great price for that amount of bandwidth.

It's just a bit more than that. they will run it, only if they think they can pull 40 + clients out of that building in 2 years. I wanted the connection for my building but they said no. the build next door has it. I'm thinking of moving.
Mike

I don't think Wal-mart (Rackshack) is going to fall so easily.

You'll see their prices fall before the company ever does. With all the horror stories coming through here you have to wonder: 10k servers, 7500+ clients, 1-2 complaints per day. Considering the huge leap in technology and dumb things a user could do as compared to simple webspace hosting you can't really complain.

Then again, stranger things have happened. Maybe Headsurfer hired those guys that did accounting for Enron.

-Matt